The treasurer for Chic Man Clothing must decide how much money the company needs to borrow in July. The

balance sheet for June 30, 2010 is presented below:

Chic Man Clothing Balance Sheet
June 30, 2010
Cash $87,000 Accounts payable $550,000
Marketable securities 123,000 Long-term debt 350,000
Accounts receivable 360,000 Common stock 130,000
Inventory 300,000 Retained earnings 270,000
Total current assets 870,000 Total liabilities and
stockholders' equity
1,300,000
Fixed assets 430,000
Total assets $1,300,000
The company expects sales of $400,000 for July. The company has observed that 25% of its sales is for cash and
that the remaining 75% is collected in the following month. The company plans to purchase $345,000 of new
clothing. Usually 70% of purchases is for cash and the remaining 30% of purchases is paid in the following
month. Salaries are $135,000 per month, lease payments are $35,000 per month, and depreciation charges are
$20,000 per month. The company plans to purchase a new van for $60,000 in July and sell its marketable
securities for $123,000. If the company must maintain a minimum cash balance of $25,000, how much money
must the company borrow in July?

The company needs to borrow $376,500.
Chic Man Clothing
Cash Budget for July, 2010
Cash Inflows
Reduction in cash to minimum $62,000
Sale of marketable securities 123,000
Collection of accounts receivable 360,000
Cash sales (.25)($400,